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Here’s what you need to know today:
- Landlords Seek Flex Space Firms To Fill Vacancies
- Facebook Commits To Permanent Remote Working Policies
- Investments Into Environmental Proptech Skyrockets
- Talent Incentive Programs Lure Remote Workers To New Areas
- Concerns Emerge About WeWork’s Growth Measures
- New Insurance Program Provides Protection For Flex Space
Landlords Seek Flex Space Firms To Fill Vacancies
Landlords are turning to flexible workspace firms to fill in vacant office space and rebound from the losses caused by the pandemic.
A report by JLL has shown that, while landlords are seeking more office space, operators are not eager to sign new leases as they have also faced their own struggles over the past year or so. However, some experts believe a pivot to management agreements could be the solution needed.
“The shift to management agreements means the sector can grow quickly with the capital requirements spread across a greater set of partners,” said Ben Munn, managing director of flex space at JLL. “Management agreements can also align landlords and operator incentives, creating a mutually beneficial partnership for all parties.”
This business model is similar to those seen in the hospitality industry, in which operators handle daily managerial duties and landlords cover the expenses to outfit the space, while also receiving a larger portion of revenue. Even more, building owners are able to alleviate the risk associated with leasing to a single tenant.
Additionally, some landlords may choose to operate their own flex space brand instead of partnering with operators. Others may purchase stakes in coworking firms or acquire smaller competitors altogether.
Facebook Commits To Permanent Remote Working Policies
Facebook told its employees last May that they can continue working remotely after the pandemic has ended.
The social media giant told its staff they could work from home until this summer, but if an employee wants to continue working from home after this time, they must apply for a full-time remote work position.
“For example, parents who are closer to their children and are happy to cut their commute time and optimize their work day, they’re thrilled to work from home,” said Brynn Harrington, vice president of Facebook’s HR team.
However, Harrington added that the company understands this arrangement has not been ideal for some staffers, including those who are working out of small apartments with roommates, and is working on reopening offices for those employees.
Employees have been allowed to work from home until July 2, and those who are not full-time remote workers may continue to do so until one month after their office reopens at 50% capacity.
The company will reportedly reopen its Silicon Valley offices in May at 10% capacity, but will continue to require face masks, physical distancing and Covid-19 testing. Facebook has also said the earliest they may be able to open their largest sites at 50% capacity will be in September.
This echoes other tech companies who have committed to permanent remote working policies, such as Twitter.
Investments Into Environmental Proptech Skyrockets
Investments into climate change technology companies are growing as building owners seek to create a more sustainable future.
For Clockworks Analytics, a building software company that helps optimize energy and enhance indoor air quality, they are seeing firsthand how much the industry is growing.
“Last quarter, we had our best quarter ever in terms of new business,” said Nicholas Gayeski, cofounder and CEO of Clockworks Analytics. “We’re projecting something like 40 percent growth this year.”
A report from PwC found that in 2019, total venture funding for climate tech firms had increased by over 3,750% from 2013.
Even the pandemic couldn’t hinder the growth of environmental proptech, with more and more companies finding it necessary to invest into health measures within the workplace. For instance, Amazon launched its $2 billion “Climate Pledge” venture fund last summer to invest into companies that are helping with the transition towards a low-carbon economy.
Some companies are directly addressing the environmental impact of buildings themselves, which are big contributors to climate change.
For example, CarbonCure, which received an investment from Toronto’s Greensoil PropTech Ventures, aims to improve the curing properties of concrete in order to reduce its cement content, which would help cut down on greenhouse gas emissions.
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“As an industry, we can no longer abide by outcomes where construction and real estate consume more than 40 percent of the energy, produce 40 percent of the emissions, and generate 40 percent of our landfill waste,” said Heather Widman, a principal on the investment team at Building Ventures.
Talent Incentive Programs Lure Remote Workers To New Areas
Cities across the U.S. are launching “talent incentive” programs that provide remote workers with cash simply to move to their area for a year or more.
As many city dwellers migrate to areas with more space and a lower cost of living, policymakers are jumping at the opportunity to bring in new residents and boost their city’s economy.
For instance, Tulsa Remote was actually created in 2018 before remote working became a mainstay for millions of workers. The program provides workers with $10,000 grants, as well as activities and events to help participants integrate into the local community.
“That integration component is one of the most important aspects to get right. If you just set up a talent program in a vacuum without having a community that’s vibrant and inclusive around it, it just doesn’t work,” said Ben Stewart, executive director at Tulsa Remote. “You have to make people feel good about their relocation immediately and get them connected in a neighborhood.”
Pew Research Center found that 1 in 20 Americans had moved due to the pandemic, which has led to a boom in “Zoom towns” that remote workers have flocked to.
These programs are powered by the belief that remote working is not going anywhere, and this could lead smaller towns and suburbs to become technology and cultural hubs.
For Bob Ross, senior VP of marketing at the Greater Topeka Partnership, each of the $10,000 provided to workers who participate in the city’s “Choose Topeka” program aims to generate $50,000 of economic growth in one year.
Concerns Emerge About WeWork’s Growth Measures
WeWork is taking a new approach in an effort to go public, but some of the facets that led to the demise of its 2019 IPO attempt are starting to reemerge.
This time, the coworking firm is merging with a special purpose acquisition company (SPAC) BowX Acquisition Corp., choosing a less rigorous path compared to the IPO process.
In a call with investors, BowX’s chairman described WeWork as a $5 billion revenue company, but this is more of a projection as the company is still recovering from the pandemic’s hit.
Prior to its IPO, the Securities and Exchange Commission told WeWork it had to alter its profit and growth measures. According to Minor Myers, a law professor at the University of Connecticut who specializes in corporate finance, “the SEC could push back hard again” if the company doesn’t pait a more realistic picture of its financial standing.
New Insurance Program Provides Protection For Flex Space
Proximity Space, a workplace management software firm, has announced its new initiative Proximity Protect, an insurance brokerage for coworking and flexible office operators, members and tenants.
The company claims to be the country’s first brokerage focused on providing insurance for the flex office industry and their members.
As the popularity of flexible office space grows, operators have been offered slim options for coverage and competitive pricing. But Proximity Protect aims to tackle risk management and provide insurance programs catered to the needs of the flexible office industry.
With many companies preparing to bring workers back to the workplace, Proximity is preparing for these firms to include flexible workspaces as part of their plans.
“The insurance industry can be slow to innovate, which leads to risks simply being declined or inadequate coverage provided for the space operator,” said David Young, president of Proximity Protect and risk management veteran.
Currently, Proximity Protect’s policies include general liability, workers’ compensation, cyber liability and employment practices liability.Share this article